AMD Drops Q2 Sales Forecast

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Updated: Advanced Micro Devices declines to comment on news that it expects sales of its chips to fall 9 percent from its first-quarter results, saying to "stay tuned" for the earnings report on July

Microprocessor manufacturer Advanced Micro Devices waited until after business hours July 6 to announce that it has cut its sales forecast for Q2, saying it expects income from its chips to fall 9 percent from its first-quarter results.

The Sunnyvale, Calif., company had previously forecast that sales would be flat to slightly down from the prior quarter.

The company said it expected second-quarter sales of about $1.22 billion, an increase from a year earlier but below analysts' average forecast of $1.31 billion, according to Reuters Estimates.

Record AMD Opteron processor sales were driven by continued strong demand for single-, dual- and multi-socket configurations for servers and workstations, the company said in a statement.

However, sales of entry-level and mainstream mobile and desktop processors were down substantially, which led to the big sales falloff.

AMD spokesman Dave Kroll told eWEEK later in the evening that the company would have no comment at this time, saying "the lawyers have us on a tight leash on this ... you'll have to stay tuned for earnings and find out more detail on that call."

In May, AMD's stock price increased on the news that PC maker Dell Inc. of Round Rock, Texas, would begin using AMD chips in its high-end servers and would terminate its exclusive chip-buying relationship with Intel.

AMD will report its second quarter 2006 results after market close on July 20. AMD will provide a real-time audio broadcast of the teleconference on the investor relations page of its Web site.

At the close of trading July 6, AMD's stock was at $23.83, down $0.07 cents on the day.

Editor's Note: This story was updated to include additional financial detail and comment from an AMD spokesman.

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